No its not waht Elance Escrow is doing. Its what upwork has been doing since it was oDesk. We tell them how much to bill the client, they collect the money from the client, they hold the money for us and then they transfer than money to our bank or paypal account either when we request it or when it exceeds a set amount. For that they charge a fee that is a percenatge of the the money we earn, that is a financial service.

If it wasn't a financial service and we were paying for use of the website then we would be paying a FLAT rate no matter if we billed $200, $2000, $20000, $200000 or $200mill

No its not waht Elance Escrow is doing. Its what upwork has been doing since it was oDesk. We tell them how much to bill the client, they collect the money from the client, they hold the money for us and then they transfer than money to our bank or paypal account either when we request it or when it exceeds a set amount. For that they charge a fee that is a percenatge of the the money we earn, that is a financial service.

If it wasn't a financial service and we were paying for use of the website then we would be paying a FLAT rate no matter if we billed $200, $2000, $20000, $200000 or $200mill

Well, none of their competitors have been recognized as a financial service, not even PPH in the UK. And, why bother, the VAT is deductable anyway if you are VAT exempted.

3. What am I paying VAT on? Will my earnings to-date be assessed VAT by Upwork?

VAT is not being charged on your earnings from your clients. That is a separate question and you should consult your tax advisor whether to charge your client VAT for your services. Upwork will only charge VAT on the electronically supplied services (ESS) we provide to you, which are comprised of the following:

Wrong: We do not have to consult tax advisors for this. According to European law VAT has to be applied (alternatively reverse charge, each VAT ID has to be approved). VAT is a part of the invoice and cannot be separated. You must not send an invoice to European clients in behalf of the freelancer without VAT (or reverse charge). The finance ministers are more interested in this part of the business than in the VAT applied to Upwork's services. If this VAT gets lost in the busines that will cause severe legal problems for the freelancers.

Example Germany: If you charge 100 USD to a client in my name 19 USD (19%) of this amount have to be transfered to the German state. And this has to appear on the invoice!

Moreover, freelancers have to prove for each invoice who paid their service. If they are not able to do that they can be suspected of money laundering. By the way: tax insvestigators' work could not be easier with freelancers' names and income visible in search engines as well as our discussions in the community here.

9. Doesn’t this conflict with Upwork’s Terms of Service that states the user is solely responsible for tax?

No, this change is in accordance with our Terms of Service. Again, VAT is being assessed on services provided by us, not on the services that you provide to your clients.

Right but as long as Upwork issues invoices for the work of the freelancers and is therefore responsible that the VAT system is applied. Just the way as it is handled in Elance up to now.

Hi, regarding André Barbosa's comment : him and I reside in Portugal and we have a valid VAT number in the correct format that Upwork needs. The thing is : our VAT numbers will only appear as valid in VIES if we are registered as independent freelancers in our country and if we appear as eligible to provide services to EU countries. If Upwork is charging us VAT for services provided to us and present that information to our government, we also need to present an invoice to our government. If our VAT number is validated, we will have to report the VAT charge on our own. We can only do that if we have Upwork's international VAT number/any identification number, because we need to also have a proof of that charge. We can face serious legal issues if our government finds an amount declared onmy my bbehalf and I didn't declare it too. It is similar to the example provided above for Germany.I hope I made sense in my wording.Thanks.

With this new change will freelancers be able to have access to the info needed to properly invoice a client? I I want and need access to that client information in order to send my own invoices and make sure they comply with my country's tax laws.